In the next 5-10 years, corporate financial managers should be aware of potential geopolitical
risks, such as trade tensions or natural disasters, which could disrupt global supply chains and
affect a company's operations and bottom line. The war in Ukraine will influence the world trades
in that region. How involved will the US be in the dealing with the future conflict. How will this
affect other countries or will this conflict spill into other of our trade partners.
Even if a company does not have global operations, a disruption of the supply chain as we have
experienced can have an impact on a company's operations. d
Additionally, there are an increasing number of natural disasters happening all the time. We are
currently experiencing flooding in CA, freezing weather in middle and north of the country and
severe storms in the south. The economic impact from these disasters will be felt in the coming
years.
It has been a wonderful 10 weeks learning from Dr. Gary and virtually interacting with each of
you. The macroeconomic variable that I believe corporate financial managers should be preparing
for in the next 5 – 10 years is the rising interest rates. Interest rates have a significant influence on
financial markets. Interest rates also affect customer spending which affects inflation. A decrease
in customer spending will result in a decrease in demand for products and services, meaning
prices will not rapidly rise.
There are many concepts and skills I have learned and developed in this course that will help me
in my professional life. I currently work in hospital administration as a project manager for Bon
Secours Mercy Health (BSMH). Occasionally, I am asked to either build or evaluate proformas
for different capital projects. The understanding of Net Present Value (NPV) and Internal Rate of
Return (IRR) are key to the acceptance to a project. For example, a few weeks ago I was asked to
evaluate whether it would be financially responsible to expand one of our outpatient physical
therapy sites. After gathering data and putting together a proforma, based on the initial capital,
BSMH weighted average cost of capital (WACC), and future cashflows (for 5 years), both the
NPV and IRR came out negative. My team and I evaluated other factors such as projected market
service line growth and other options for our patient population and decided on rejecting the
expansion. Working on this project made me reflect on milestone 3 and appreciated the concepts
that we learned.
I believe financial managers should be preparing for inflation in the next 5 to 10 years. There has
been a huge spike in inflation in today's world and this will not be the last one. If financial
managers are going through this rollercoaster now, it will help them prepare for other spikes in
the next 5 or 10 years.
The time value of money concept will help me prepare for the impact of inflation. The time value
of money has helped me understand that a dollar today is worth more than it will ever be and that
investing is important. The importance of compounding was also cleared up for me in this course.
If I save and invest now, it will personally place me in a better position later in life when inflation
spikes again in 5 or 10 years.
Let me start by saying that this class has been extremely challenging for me. I have always
worked for very small companies and have no experience with the stock market, bonds, and
investments. All of this was a huge learning curve.
As far at the next 5 to 10 years, managers need to be honed in our market conditions and how
they affect their companies’ investments and liabilities. For example, the owners of the company
I work for were shocked at the renewal rate of our line of credit because we have been sitting on
a low rate for years. I am now able to provide them with Insite as to whether it would be
beneficial to use the line of credit versus using available cash by preparing detail on the impact of
the rate and uncertainty of the rate potentially becoming higher.
Inflation is another area of concern. As prices rise, managers need to keep a close eye on their
bottom line to maintain a level of profitability that allows the company to move forward.
From a personal perspective, having a better understanding of the stock market may assist me in
the future as I prepare for retirement. I currently do not have any plans to change employers yet
now feel more confident that if I went to a more corporate environment, I would feel comfortable
in a financial role that had more assets and liabilities than the company I presently work for.
In the next 5-10 years, the macroeconomic variables that corporate financial managers should
prepare for are inflation and unemployment. Currently, the inflation rate is on an increasing trend.
According to the Phillips Curve, it hypothesizes that there is a correlation between inflation and
unemployment. Tretina (2021) states that when inflation is high, unemployment is low or vice
versa. The inflation rate is expected to decrease in the next 5-10 years. Inflation and
unemployment play a significant part in a business. Inflation causes business to increase prices on
their products to be able to keep up with the rising prices and labour expenses. Unemployment
rates are low, so that means that businesses are at fully staffed rates.
Overall, inflation has huge part in everyone’s life. In some cases, business do not provide an
adequate increase in wages to employees for them to be able to keep up with inflation rates. I
would recommend for everyone to try and budget as much as they can.
Inflation And Unemployment – Forbes Advisor. (n.d.). Www.forbes.com.
https://www.forbes.com/advisor/investing/inflation-and-
unemployment/#:~:text=The%20Phillips%20Curve%20hypothesizes%20that
